Visa Faces Ohio Attorney General Probe Over Its Debit Cards -- Update

The card network disclosed in a company filing on Friday that it received a civil investigative demand from Ohio Attorney General Mike DeWine's office in January. The demand requested documents and information pertaining to several debit-card practices, including the company's rules related to the acceptance of its debit cards.

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A spokeswoman for Mr. DeWine, a Republican, said the probe is focused on chip-enabled debit cards.

Other practices also related to chip-enabled debit cards that the attorney general's office is looking into include Visa's card-holder-verification methods and the routing of its debit-card transactions.

Visa said in the filing that it is cooperating with the attorney general.

The card networks' debit-card practices have been at issue for decades. They have been a source of friction and litigation between merchants and the large card networks, Visa and Mastercard Inc., for issues including the prices the networks set for swipe fees.

A federal law that went into effect in 2011 set government price caps on those fees. It also required that debit cards provide at least two unaffiliated card networks for merchants to choose from.

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But that choice has been somewhat limited for merchants. In many countries that have migrated to chip-based debit cards, consumers are required to input their personal identification number, or PIN, at the terminal. That isn't a requirement in the U.S.

Visa has a rule that merchants aren't allowed to require consumers to use a PIN if the card holders don't want to. If consumers sign for their purchase, those transactions in most cases go over the Visa network as opposed to the other PIN-based debit networks that the merchant would have otherwise been able to choose from. Some of those PIN networks over the past year have begun accepting signature as well.

Cincinnati-based Kroger Co. filed a lawsuit against Visa last year saying the network threatened to increase fees and cut off Kroger's ability to accept Visa debit cards if it didn't allow consumers to sign instead of using their PIN. The lawsuit is still pending.

The Durbin amendment, the federal law that requires merchants have at least two unaffiliated networks to choose from, doesn't take into account the fact that the consumer's decision not to use PIN impacts the merchant's ability to choose between debit networks.